Klarna is disputing new research into the buy now, pay later (BNPL) industry published by Barclays with debt charity StepChange that warns of the many people who could fall into financial peril due to unregulated financial products.
Barclays issued a press release Thursday (June 23) calling on retailers to better examine BNPL offerings since most BNPL lending happens during the checkout process. The release said many retailers don’t fully understand the credit options they’re offering to customers.
In response to Barclays’ research, Klarna’s U.K. boss Alex Marsh told UK Tech News it was a subtle way for the bank to suggest its own loan installment product.
“It is mind-boggling and frankly irresponsible in a cost of living crisis, that Barclays should use StepChange to endorse their high-cost installment credit product which charges 10.9% interest and to lobby against interest-free and manageable Buy Now Pay Later products,” Marsh told UK Tech News.
“The conclusions in this report from Barclays are hugely patronizing to U.K. retailers,” Marsh said.
Barclays is calling for stronger regulation of the BNPL sector and other unregulated forms of credit. The U.K. government announced on Monday (June 20) that it was in the process of drafting legislation for the BNPL sector, which would include mandatory credit checks for consumers and registration with the Financial Conduct Authority (FCA).
Regulation is welcomed by Klarna, UK Tech News reported, and the company urged the U.K. government to “move quicker.”
BNPL services in the U.K. benefit from an exemption in the law for short-term credit-free credits. As PYMNTS recently reported, regulation in this space will not only affect BNPL products, but also other forms of unsecured short-term credit.
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Klarna is also set to debut its loyalty card feature, backed by mobile wallet provider Stocard, which Klarna acquired in 2021. The digital loyalty cards will integrate with the Klarna app for both in-store and online shopping.